Montana Heat Pump Rebates & Incentives (2026)
Montana's heat pump incentive landscape is limited in 2026. Federal tax credits expired, and the IRA-funded HEAR and HOMES rebate programs remain paused at the state level. NorthWestern Energy offers $450 per air-source heat pump and up to $3,000 for heat pump water heaters, while BPA-funded cooperatives in western Montana provide $600–$1,560 for qualifying systems. This guide covers all major Montana heat pump incentives available in 2026, including NorthWestern Energy rebates, BPA cooperative programs, Bozeman and Missoula County local rebates, state tax credits, and HEAR/HOMES status. Here's what's actually available.
Last verified: March 24, 2026
Rates and program availability may change after this date.
Montana
Limited / Region-Dependent
NorthWestern Energy offers $450 per ASHP and up to $3,000 for HPWHs. BPA cooperatives like Flathead Electric provide $600–$1,560. Federal 25C/25D credits expired Dec 2025. HEAR and HOMES programs remain paused pending DOE approval. Bozeman and Missoula County offer HPWH rebates that stack with utility incentives.
Sources:
Short Version
✓ NorthWestern Energy Rebates
$450 per air-source heat pump (ducted or ductless) and up to $3,000 for heat pump water heaters through NWE's E+ program. Available to all NWE electric customers through June 2026.
✓ BPA Cooperative Rebates
Western Montana cooperatives offer $600–$1,560 for air-source heat pumps and $700–$900 for heat pump water heaters. Flathead Electric has the richest program.
✓ Total Potential Savings
$450–$1,560 for air-source heat pumps depending on utility territory. HPWH stacking in Bozeman reaches $3,500 and in Missoula County up to ~$4,435. Full electrification packages can reach ~$5,000 total incentives when HEAR launches.
✗ Federal Tax Credits Expired
Section 25C ($2,000/year for heat pumps) and Section 25D (30% for geothermal) both expired December 31, 2025 under the One Big Beautiful Bill Act. No replacement credits exist.
⚠ HEAR & HOMES Programs Not Yet Launched
Montana DEQ's HEAR (up to $8,000 per heat pump) and HOMES (up to $8,000 for whole-home projects) IRA rebate programs remain paused pending federal DOE approval. No launch date has been announced. Do not count on these programs when budgeting a 2026 installation.
Federal Tax Credits Have Expired
The Section 25C Energy Efficient Home Improvement Credit (up to $2,000/year for heat pumps) and the Section 25D Residential Clean Energy Credit (30% of geothermal heat pump costs with no cap) both expired December 31, 2025. The One Big Beautiful Bill Act accelerated these expirations from their original 2032 sunset. Equipment must have been fully installed and operational by December 31, 2025 to qualify — purchasing or signing a contract in 2025 is not sufficient if installation slipped into 2026. Full details on the federal credit expiration →
The surviving federal programs are the HEAR and HOMES point-of-sale rebates, which Congress preserved in the One Big Beautiful Bill. However, these are direct rebates administered at the state level — and Montana's programs have not yet launched.
HEAR & HOMES IRA Rebates — Paused in Montana
The Montana Department of Environmental Quality (DEQ) Energy Bureau is the designated administrator for both IRA rebate programs. DEQ submitted its implementation application to the U.S. Department of Energy in November 2024, but program design was paused in February 2025 to allow DOE to formulate updated guidance. No launch date has been announced.
Home Electrification and Appliance Rebates (HEAR)
When launched, HEAR would provide point-of-sale rebates at these federal maximum amounts:
| Measure | Maximum Rebate |
|---|---|
| Heat pump (HVAC) | $8,000 |
| Heat pump water heater | $1,750 |
| Electric panel upgrade | $4,000 |
| Electric wiring | $2,500 |
| Insulation, air sealing, ventilation | $1,600 |
| Household cap (all categories) | $14,000 |
HEAR eligibility is income-based: households at or below 80% of Area Median Income (AMI) receive rebates covering 100% of project costs (up to caps). Households at 80–150% AMI receive 50% coverage. Households above 150% AMI are not eligible for HEAR.
Home Efficiency Rebates (HOMES)
HOMES provides whole-house performance-based rebates tied to measured or modeled energy savings. For households at or below 80% AMI, rebates reach $4,000 for 20–34% energy reduction and $8,000 for 35%+ reduction. Above 80% AMI, those figures drop to $2,000 and $4,000 respectively. Unlike HEAR, HOMES is available to all income levels but requires a whole-house energy assessment.
⚠ Do Not Budget Around These Programs
Both HEAR and HOMES remain in "pended" status with DOE. Montana DEQ cannot access funds or begin operations until federal approval is granted. There is no announced timeline. Plan your 2026 installation around currently available utility rebates only.
Utility Rebate Programs
NorthWestern Energy (Largest Utility)
NorthWestern Energy operates the E+ Residential Electric Rebate Program through its current cycle ending June 30, 2026. Available to existing-home NWE electric customers statewide.
| Measure | Rebate | Key Requirement |
|---|---|---|
| Central heat pump (ducted or ductless) | $450/unit | ENERGY STAR or SEER2 ≥ 15.2, HSPF2 ≥ 8.5 |
| Heat pump water heater | Up to $3,000 | NEEA Tier 3 or 4; participating contractor required |
The ASHP rebate applies identically to ducted and ductless systems — NWE does not differentiate. No cold-climate-specific adder, income-qualified tier, or refrigerant requirement exists. The HPWH program is administered in partnership with Evergreen Energy Partners and requires pre-approval through a participating contractor network. New construction does not qualify.
Montana-Dakota Utilities (Eastern Montana)
MDU, which serves eastern Montana including parts of the Billings area, does not offer any heat pump rebates. MDU's residential programs are limited to $300 for high-efficiency natural gas furnaces, $60 for Wi-Fi thermostats, and LED lighting rebates. This is a significant gap for the roughly 70,000+ households in MDU's Montana service territory.
BPA-Funded Electric Cooperatives
Western Montana electric cooperatives funded by the Bonneville Power Administration generally offer more generous heat pump rebates than NorthWestern Energy. These programs are exclusive to cooperative members.
| Cooperative | ASHP Rebate | HPWH Rebate | Notes |
|---|---|---|---|
| Flathead Electric (Kalispell) | $600–$1,560 | Available | Highest rebate for variable-speed replacing electric furnace; 3% on-bill financing |
| Missoula Electric | $920 | $700–$900 | Ductless; income-qualified program available (≤ 200% FPL) |
| Lincoln Electric (Eureka) | $800–$1,000 | — | Ducted and ductless; variable-speed earns higher tier |
| Yellowstone Valley Electric (Billings area) | $200/ton, up to $800 | — | Add-on heat pump; also $200/ton up to $1,000 for geothermal |
| Sun River Electric | — | — | $200/ton up to $1,000 for ground-source; 3¢/kWh heat rate discount |
| Lower Yellowstone Rural Electric (Sidney) | $150/ton | — | All heat pump types |
Ravalli Electric Cooperative (Victor) also offers rebates for ductless, ducted, and ground-source heat pumps but does not publish amounts online. Contact (406) 961-3001.
City & County Programs
Two Montana communities offer local rebates for heat pump water heaters that stack with utility incentives. These represent some of the best HPWH stacking opportunities in the state.
City of Bozeman — $500 HPWH Rebate
Bozeman offers a $500 rebate for qualifying electric heat pump water heaters, plus $75 for completing a post-installation survey. The pilot program, run in partnership with Montana DEQ, requires connection to Bozeman city water and equipment listed on NEEA's Qualified Products List. This stacks with NorthWestern Energy's up to $3,000 HPWH rebate for a combined total of up to $3,575.
Missoula County — $1,435 HPWH Rebate
The Electrify Missoula partnership between the city, county, and Climate Smart Missoula offers $1,435 for heat pump water heaters (for purchases after May 1, 2025). Products must be on NEEA's Qualified Products List and require a plumbing permit with final inspection. For NWE customers, this stacks with the up to $3,000 NWE rebate for a combined total of up to $4,435. Missoula Electric Cooperative members can stack with the co-op's $700–$900 HPWH rebate instead.
HPWHs Are Montana's Best Stacking Opportunity
Heat pump water heaters are the one category where Montana incentives can cover most or all of the installed cost. A typical HPWH costs $1,500–$3,500 installed. With NWE's up to $3,000 plus Bozeman's $500 or Missoula County's $1,435, the equipment may effectively be free. This is the single strongest incentive stack available in Montana today.
Billings, Great Falls, and Helena have no city- or county-level heat pump incentive programs as of March 2026.
How Programs Stack
Utility rebates stack freely with local city/county programs and (when launched) with HEAR or HOMES. HEAR and HOMES cannot cover the same measure in the same home, and total rebates cannot exceed total project cost. Below are realistic stacking scenarios for a typical $18,000 whole-home cold-climate ducted heat pump installation in NorthWestern Energy territory.
Above 150% AMI — Ducted Cold-Climate ASHP
- Federal tax credits: $0 (expired)
- HEAR: $0 (income-ineligible)
- HOMES (if launched, 35%+ savings): up to $4,000
- NWE utility rebate: $450
Current realistic maximum: ~$450
Future potential if HOMES launches: ~$4,450
80–150% AMI — Ducted Cold-Climate ASHP
- Federal tax credits: $0 (expired)
- HEAR (50% of cost, capped at $8,000): up to $8,000
- NWE utility rebate: $450
Future potential if HEAR launches: ~$8,450
Current available: $450 only
Below 80% AMI — Ducted Cold-Climate ASHP (Best Case)
- Federal tax credits: $0 (expired)
- HEAR (100% of cost, capped at $8,000): $8,000
- NWE utility rebate: $450
- WAP coverage (if eligible): potentially full system cost
Future potential if HEAR launches: $8,450+
Current available: $450 (or full WAP coverage if eligible)
What You'll Actually Pay Today
Until HEAR and HOMES launch, most Montana homeowners will pay $16,440–$17,550 out of pocket for a typical $18,000 ducted cold-climate heat pump installation (after the $450–$1,560 utility rebate depending on territory). BPA cooperative members in western Montana fare better. The exception: heat pump water heaters in Bozeman or Missoula County, where stacking can cover the full installed cost.
Montana has no state-level heat pump tax credit for air-source systems. The geothermal tax credit (up to $1,500) applies only to ground-source installations. The Alternative Energy Revolving Loan Program (3.5% fixed, up to $40,000) primarily covers geothermal and solar systems.
State Programs & Assistance
Montana Weatherization Assistance Program (WAP)
Administered by DPHHS through local Human Resource Development Councils (HRDCs), the WAP provides free energy efficiency upgrades — including potential heating system replacement — for income-qualifying households. Eligibility is linked to LIHEAP qualification, roughly 60% of state median income (about $64,846/year for a family of four). Heat pumps may be installed when an energy auditor determines them cost-effective, but this is not guaranteed.
Montana Geothermal Tax Credit
Up to $1,500 per installation for ground-source heat pump systems in a principal dwelling. Filed on Montana Revenue form ENRG-A. Unused credit carries forward up to 7 years. This applies only to geothermal systems, not air-source units. Verify current availability with the Montana Department of Revenue.
Alternative Energy Revolving Loan Program (AERLP)
This DEQ-administered program offers 3.5% fixed interest loans up to $40,000 with a 10-year maximum term and no down payment. Ground-source heat pumps qualify directly. Air-source heat pumps may qualify only when installed alongside a qualifying alternative energy system (such as solar). Applications are scored competitively — demand has exceeded available funds since April 2023. The next application window opens April 1–30, 2026.
⚠ Common Mistake: Assuming AERLP Covers Air-Source Heat Pumps
The Alternative Energy Revolving Loan Program primarily funds geothermal and solar projects. A standalone air-source heat pump installation typically does not qualify unless paired with a qualifying alternative energy system. Contact DEQ at (406) 444-4960 before applying.
Montana Climate & Heat Pump Performance
Montana sits firmly in cold-climate heat pump territory. Every major city falls well below the 5°F threshold used by ENERGY STAR's Cold Climate Heat Pump specification. Equipment selection matters — cold-climate certification is strongly recommended, and most installers recommend dual-fuel setups pairing a heat pump with a gas furnace for the coldest 5–15 days per year.
| City | ASHRAE 99% Design Temp | Annual Heating Degree Days |
|---|---|---|
| Billings | -10°F | 7,049 |
| Missoula | -6°F | 8,125 |
| Great Falls | -15°F | 7,750 |
| Helena | -16°F | 8,129 |
| Bozeman | ~-14°F | ~7,900 |
Roughly 59% of Montana homes heat with natural gas, 24% with electricity, and 9–14% with propane. Montana residential natural gas prices average about $7.88/Mcf — well below the national average — which weakens the operating-cost case for switching from gas to heat pump. The strongest economic case exists for the estimated 40,000+ households heating with propane or electric resistance, where heat pump conversion delivers immediate savings.
✓ Best Candidates for Heat Pumps in Montana
Homes currently heating with propane or electric resistance (baseboard, wall heaters, electric furnaces). Households served by BPA-funded cooperatives with higher rebates. Homeowners in Bozeman or Missoula County who want a heat pump water heater at near-zero cost. Homeowners with existing ductwork who want efficient cooling in addition to heating.
For equipment selection, look for HSPF2 ratings of 9.0 or higher and cold-climate certification. Models from Mitsubishi (Hyper-Heat), Daikin, Carrier (Greenspeed), and Bosch operate down to -13°F to -22°F. For more on how a heat pump fits with home battery storage, see our battery guide.
How to Apply
The process depends on your utility. Here's the path for NorthWestern Energy customers, which covers the largest share of Montana households:
Check your utility
Confirm whether you're an NWE electric customer, an electric cooperative member, or an MDU customer. This determines which rebates are available to you. Co-op members should contact their cooperative directly.
Choose qualifying equipment
For NWE's ASHP rebate: ENERGY STAR certified or SEER2 ≥ 15.2 and HSPF2 ≥ 8.5. For the HPWH program: NEEA Tier 3 or 4 equipment through a participating contractor. Cold-climate certification is strongly recommended for Montana's temperatures.
Install and submit
Have the system installed by a licensed contractor. Submit the NWE E+ rebate application (Form 3743) within 90 days of installation with proof of purchase and contractor invoice. For HPWH, your participating contractor handles the rebate process.
Stack local rebates if eligible
Bozeman residents: apply separately through the city's HPWH rebate program. Missoula County residents: apply through the Electrify Missoula portal. Both require NEEA-listed equipment and proof of installation.
What to Watch
Montana DEQ HEAR/HOMES Launch
Montana's HEAR and HOMES programs could add $4,000–$8,000 in rebates for income-qualifying households. Monitor DEQ's Home Energy Rebates page for updates. No timeline has been announced, but DOE approval could come at any point.
IRA Funding Runway
Congress preserved HEAR and HOMES funding in the One Big Beautiful Bill, but the political environment for clean energy spending remains uncertain. Future legislation could modify program terms, funding levels, or eligibility criteria.
NWE E+ Program Renewal (July 2026)
NorthWestern Energy's current rebate cycle ends June 30, 2026. Rebate amounts and qualifying criteria may change in the next program year. If you're planning a 2026 installation, apply before the current cycle closes.
MDU Program Expansion
Montana-Dakota Utilities is the notable gap in Montana's utility rebate landscape. Watch for program changes — MDU could add heat pump rebates as equipment efficiency improves and cold-climate adoption grows in eastern Montana.
Frequently Asked Questions
What heat pump rebates are available in Montana in 2026?
Montana heat pump rebates in 2026 come primarily from utilities. NorthWestern Energy offers $450 per air-source heat pump and up to $3,000 for heat pump water heaters. BPA-funded cooperatives like Flathead Electric offer $600–$1,560 for air-source systems. Bozeman offers a $500 HPWH rebate and Missoula County offers $1,435. Federal tax credits under Sections 25C and 25D expired December 31, 2025. Montana's HEAR and HOMES IRA rebate programs have not yet launched.
Can I stack NorthWestern Energy rebates with HEAR or local rebates in Montana?
Yes. Utility rebates from NorthWestern Energy or cooperatives can stack with local city and county rebates. A Bozeman NWE customer could combine the $3,000 NWE HPWH rebate with Bozeman's $500 rebate for up to $3,500 total. A Missoula County NWE customer could stack the $3,000 NWE rebate with the $1,435 county rebate for up to $4,435. When HEAR launches, it will also stack with utility and local rebates for income-qualifying households.
Do heat pumps work in Montana winters?
Yes, but equipment selection matters. Montana's ASHRAE design temperatures range from -6°F in Missoula to -16°F in Helena, well below the 5°F threshold for ENERGY STAR Cold Climate certification. Modern cold-climate models from Mitsubishi, Daikin, and Carrier operate down to -13°F to -22°F but experience 30–50% capacity loss at extreme temperatures. Most Montana installers recommend dual-fuel setups pairing a heat pump with a gas furnace for the coldest days.
Who administers Montana's HEAR and HOMES programs?
The Montana Department of Environmental Quality (DEQ) Energy Bureau is the designated administrator for both the HEAR and HOMES IRA rebate programs. DEQ submitted its implementation application to the U.S. Department of Energy in November 2024. Program design was paused in February 2025 pending updated DOE guidance, and no launch date has been announced as of March 2026.
Does Montana-Dakota Utilities offer heat pump rebates?
No. Montana-Dakota Utilities (MDU), which serves eastern Montana including parts of the Billings area, does not offer any heat pump rebates as of 2026. MDU's residential programs are limited to $300 for high-efficiency gas furnaces, $60 for Wi-Fi thermostats, and LED lighting rebates. Billings-area homeowners on Yellowstone Valley Electric Cooperative can access up to $800 for add-on heat pumps.
Sources
- Montana DEQ — Home Energy Rebates Program
- NorthWestern Energy — E+ Electric Rebates (Form 3743)
- NorthWestern Energy — HPWH Program
- Flathead Electric Cooperative — Air Source Heat Pumps
- Missoula Electric Cooperative — Ductless Heat Pumps
- City of Bozeman — HPWH Rebate
- Missoula County — Energy Efficiency Rebates
- Montana DEQ — Alternative Energy Revolving Loan Program
Disclaimer: This page covers the main statewide, utility, and IRA heat pump incentives available to Montana homeowners in 2026. It does not calculate savings, guarantee eligibility, or represent any incentive program. Cooperative rebate amounts vary by territory and may change without notice. We verify status regularly but programs can change without notice. Always confirm current amounts and eligibility with NorthWestern Energy, your electric cooperative, Montana DEQ, and your contractor before making decisions.
See how this state compares → Heat Pump Rebates by State (2026)